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NOI & Cap Rates With Frank Gallinelli & Self-Management With Property Meld’s Ray Hespen

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Jason Hartman and investment counselor Adam introduce a contest called The Empowered Investor. LaterJason plays a clip of real estate guru, Frank Gallinelli. Frank discusses two metrics in real estate investors need to understand- Net Operating Income and Capitalization Rates.
On the last segment of the show, Jason hosts Ray Hespen, co-founder and CEO of Property Meld. They discuss the problem areas that tenants and landlords have in order to retain the tenants longer.

Investor 0:00
just invest. It’s still a great thing to do. I know it can be scary to a lot of people. Jason’s been doing this a long time. He’s got a lot of knowledge. We’re in an age of technology and everything’s at our fingertips. You can do a lot of homework on your own. But in the end, make sure you’re talking to professionals like Jason.

Announcer 0:18
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do And now here’s your host, Jason Hartman with the complete solution for real estate investors.

Jason Hartman 1:08
Welcome to Episode 1277. Thanks for joining us. Today, we are going to talk about three things. We’re going to talk about self management with a new self management tool or, well, it’s not required that you self manage to use this tool. It’s just a tool that you’ll want to know about and check out in the real estate tech field. And we are going to have a pre recorded appearance from a multiple time guest, Frank belinelli. Talking about net operating income or noi and cap rates or capitalization rates. That’s what we’re going to do today. Adam, let’s dive in. We got to talk about the contest quickly, because we got a big show today, right?

Adam 1:51
Oh, yeah, we do. And especially it’s a really big show for listeners because they can give themselves a lot of money, a lot of money just for making a YouTube video.

Jason Hartman 1:59
There you go. Exactly. Good idea. Okay, so this is about the contest. And thank you. For those of you who have expressed interest in the contest. I think it’s really exciting. And remember, it’s almost like having a exercising contest, for example. Because in entering the contest, you are doing this for yourself, if this is a good exercise for you, regardless of whether you win anything or not everybody wins, because everybody exercised their brain in moving closer to their goals of becoming an empowered investor. So we’re really excited. So Adam, you want to tell them about the contest and what to do. I did it last time. So maybe you do it this time and and then I’ll tell them about the prize. How’s that?

Adam 2:46
Sounds good. So first off, it’s a YouTube challenge. So as you can probably guess, you’re going to be making a video now the video doesn’t have to be professionally produced. You know, if you want to that’s absolutely great, but it can just be you sitting in your living room, talking about what you want. Do so you’re going to record a video and upload it to YouTube, you’re going to use a couple hashtags. One is Jason Hartman. The other is empowered investor hashtag Jay. Jason Hartman and hashtag

Jason Hartman 3:11
investor Okay,

Adam 3:12
now it’s going to be 10 minutes or less, because we want people in you know, people’s attention span these days not that long and don’t want it

Jason Hartman 3:19
solo, you want

Adam 3:20
to well, you also want to have your idea concise. You don’t want too many details in this. This is a big overarching plan of how you’re going to become an empowered investor. And we want you to show your plans and what actions you’re going to take to become the empowered investor. It’s similar to the five year plan we did before that we had some great entries for I’m if you haven’t, if you don’t know what we’re talking about, go on YouTube search Jason Hartman five year plan, you’ll see a bunch of videos that listeners did, and then we’re going to judge them on mixture of the content and the number of views you get, and then we’ll announce some pretty pretty pricey prizes.

Jason Hartman 3:58
Yeah, some good prizes. prize is two tickets to profits in Paradise, and a one year membership for soon to be launched empowered investor community. second prize is two tickets to profits in Paradise, no membership in the empowered investor community. And then third prize is one ticket to profits in Paradise, but but there’s a big super bonus for any video that gets over 1000 views on our YouTube channel, and over 200 views on your channel. Now you might be thinking, well, I don’t have a YouTube channel. A channel just means go and create an account, which you probably already got because you have a Google account and just posted on YouTube. You don’t have to have any other videos on there and just post this video, this one video. So total of 1200 views or more. Hopefully you’ll get a lot more but we did want to set kind of the minimum there. And that is a $3,000 cruise allowance for our upcoming venture Alliance mastermind cruise. So that’s 3000 bucks. You know, toward the cruise, okay, so you can get a free cruise for one, or an almost free cruise for two people. That’s just going to be an awesome event. I’m really excited about our first cruise event. And if you don’t win the Super bonus, one of the first second or third prizes are available as well. And as Adam was saying, becoming the empowered investor is a little bit broader than the five year plan. But if you want to just make a video, maybe you didn’t enter the contest before or maybe you did a couple years ago when we did the five year plan contest. Maybe you just want to redo your video or update it or maybe you didn’t enter and you want to make one in your you know, after seeing those videos other people did you’re thinking you should have done one. So, everybody is a winner in this contest, really, because they will they will be able to crystallize their thoughts about their investing goals. So the deadline Adam so the cruise

Adam 5:57
starts October 12. And since you can pass When $3,000 towards that cruise, we’re going to cut it off a little bit before that so that you can have time to plan. So the final date entries are due by midnight eastern time, September 23. So September 23, at midnight eastern, okay. And we will announce the winner sometime during the week, but definitely by Thursday, September 26.

Jason Hartman 6:22
Yeah. And so that’s a Monday that’s on Mondays

Adam 6:23
do on Monday grades by Thursday school. Jason was talking about the five year plan. I think even if you did make the five year plan, maybe you want to talk about how you’re going to do it. Like, if you’re not going to self manage and being empowered investor that way. Maybe you’re going to talk about I’m going to hold my property managers more accountable by doing these things. So if you don’t self manage, you can still be empowered. Say, I’m going to make them give me the invoices. I’m going to make them give me pictures. I’m going to check in with them once or twice a month and just talk about maybe you have problems with them. Now how are you going to solve those problems?

Jason Hartman 6:55
Yeah, and you know, it is just crazy to me that we even have to talk about this With property managers, but there are some great ones out there, but some of them it’s just ridiculous that you really just have to constantly hold them accountable. It’s a mixed bag for sure, like anything in life, you know, everything in life, you got to work for it, folks, even this, this is just better than everything else, at least everything else I know. I’m certainly not perfect. Okay, good. Adam, we’ve got to jump in to the discussion of net operating income and cap rates. And then right after that, we’ve got the segment on the real estate technology tool property mailed You ready?

Adam 7:34
Let’s go.

Frank Gallinelli 7:37
In the last few sessions, we ramped up toward a goal of performing a financial analysis of a potential income property investment. And we began that process by accumulating data about the property and about the market in which it resides. Then organizing that data to fit a structure of financial terminology, a structure that’s used commonly by real estate investors. That terminology and cluded gross scheduled income, essentially the top line all of the potential rent that you can get from a property, then the vacancy and credit loss, which when you subtract it from the potential gross rent will leave us with the gross operating income. And then from that we subtracted a variety of operating expenses, being careful to distinguish what costs really we’re operating expenses, and we’re not. And that brought us to a bottom line of net operating income. And that organization of information is essentially the real estate version of a profit and loss statement, something that people who invest in income property call in a pod, and you will property operating data. And in our last session, I walked you through a typical a pod form, whose ultimate goal was to get to a bottom line called net operating income, or noi. And I also suggested to you that net operating income is one of the most important metrics that will encounter in our analysis of income producing real estate, which should lead you to ask a more or less obvious question. So what’s so important about it Let’s try to address that in today’s session. Let’s begin by considering one attribute of net operating income. And that is that it is totally independent of issues such as financing, personal income taxes, capital costs. Essentially, it’s the revenue stream, the income stream that comes purely from the operation of the property, hence the name net operating income. And that’s significant to us because one of the chief uses of net operating income is to employ it in the estimate of market value of a piece of real estate at a given point in time, specifically, of a piece of income producing real estate at a point in time. What you’ll find is that commercial appraisers use net operating income as one of the main focal points in doing their appraisals in estimating the market value of a property. One thing we want to think about is why in fact, do we discard issues such as financing and such as personal income texts? When we calculate net operating income, well, if a key use of net operating income is going to be to estimate value, estimate market value, I think we can probably agree that market value should not be dependent on any personal facts about the potential investor. Let me give you an example of what I mean. Let’s say that you have a lot of money for a down payment, but I don’t. Well, let’s say that you have excellent credit. But I don’t, you may be able to obtain financing for a given piece of income property on terms that are more favorable than what I can obtain it because you have a larger down payment, most likely, you’re going to have a lower debt service as well and therefore a higher cash flow. Now, would it be fair to estimate the value of a property if that value were dependent upon the type of financing that you could obtain versus the type of financing that I could obtain? Not really, those financing issues are entirely personal. They’re not part of the property. Same thing, obviously is true of personal income taxes. If you’re in a high tax bracket and I’m in a low tax bracket, I may be able to retain more of my cash flow. And you can because I have a lower tax liability. Should that difference make a difference in the value of the property? Currently it should not. So when it says net operating income is essentially a democratic metric, doesn’t matter whether I’m a affluent investor or not, doesn’t matter whether I’m a creditworthy investor or not. The property is the property. The properties income stream is what it is, and it’s totally independent of the circumstances of the potential buyer or seller. So then, once we agree that that operating income is a reasonable metric to use when estimating the market value of a property, just how does a commercial appraiser go about using it? Well, the technique is to apply what’s called a capitalization rate against that property’s net income. As I mentioned in one of my earlier sessions, my shorthand exponent of what is a market capitalization rate is that it’s the rate typically being achieved by other investors in the same market buying the same type of property. So it is property specific cap rates, as they’re called, won’t be the same even in the same market for apartment buildings, for example, as opposed to retail buildings. So let’s see how that appraiser would use this information.

Frank Gallinelli 12:24
There’s a very simple formula.

Frank Gallinelli 12:26
And it looks like this value equals net operating income divided by capitalization rate. But if we think of the noi is the income stream, way to translate the meaning of that formula is to say, I want to receive an X percent return this year on my cash investment. How much would I pay to buy this income stream this noi, so I can get this X percent return? This is why I stressed earlier that it was so important to remember That what we’re buying is truly the income stream. So the income stream, essentially is our return on investment. And we want to know, how much would we pay for it? Let me give you an example. Let’s say I want an 8% return this year on my cash investment. So how much would I be willing to invest to buy a $40,000 noi, in order to get an 8% return?

Frank Gallinelli 13:26
Well, we use the formula.

Frank Gallinelli 13:29
The value of that income stream to us is the net operating income divided by the capitalization rate. So it’s $40,000 divided by 8% 40,000 divided by point eight. And that comes out to $500,000. So if I were looking at a property, and other investors were getting an 8% return on similar properties in the same market. This property has a $40,000 current in a why would be willing to pay no more than $500,000. I say no more, because obviously, I’m always willing to pay less if I can get it for less. And that will mean of course that I achieve a higher return than a percent. So if we take those basic definitions that we had before the a pod, and expand them by just one more concept, we would start off with gross scheduled income less vacancy and credit loss equals gross operating income, less operating expenses equals net operating income. And we take it to one further line now and say, Okay, let me do something with it noi will be divided by its cap rate, and that is my presumed market value for this property. This process is called income capitalization. And that’s the common method as I said, certainly used by commercial appraisers estimate the market value of an income property. And that formula as we saw his value equals noi divided by capitalization rate. But for those of you who are alumni of algebra one in school, you’ll know that a simple formula like that can be transposed. As long as you know two of the variables, you can solve for the third. So we can transpose this formula. And one transposition would be to solve instead for the capitalization rate. And we would do that by taking noi and dividing it by value. Now, why might we do that?

Frank Gallinelli 15:26
Well, perhaps we’re unsure as to what is the prevailing market cap rate. And so we go out and collect some data about properties that have actually sold. And we take it upon ourselves to figure out what the cap rate was for each of those sales. So we go out and find perhaps five similar properties. We find out what their net operating income was. Divide each by what that property sold for. And that would tell us the capitalization rate at which that property so clearly, our goal is to look for a pattern for a typical value. We can also transpose that for Building the software in a way, in which case it would be the value of the property multiplied by the cap rate. And why might we do this? Well, if we’re becoming active investors, we can probably expect that brokers and owners will propose their specific properties or listings to us and say, Hey, take a look at this. What do you think? When someone comes cycling up to you at a cocktail party, next to the jalapeno dip? It says, I got a property I want you to take a look at. I’ve got it listed for a million dollars. What do you say to that person? Of course is fine. Send me in a pod. So what will you expect to see when you get that a pod? on the assumption that what you expect is valid information you would expect to find a particular noi. Now that seller is looking for a million dollars and if you know what the market cap rate is for properties of that type in this market, you can go right to that bottom line and say, does this noi look like it justifies the price being asked? So to recap our session briefly. I begin by taking the bottom line From our a platform at bottom line being the net operating income, or noi, and noted that I had mentioned earlier that the noi is a particularly important metric. So I raised what I thought was the obvious question, What’s so important about it? The answer, at least to a great extent, lies in the fact that the noi is what commercial appraisers use as a key ingredient in estimating the market value of a piece of income producing real estate. And I demonstrate the formula that they use in the process, which is called income capitalization. Quite simply, that the estimated market value is the noi divided by something called the capitalization rate, the rate that other investors are achieving when they buy similar properties in a similar location. I also noted that the same formula could be transposed so that you could calculate any one of the variables as long as you knew the other two. So you could use that formula to calculate the cap rate. For example, if you know a property’s net operating income and its value or probably in this case, if you knew its selling price, In other words, if you found a comparable property that had sold, you can divide its noi by its selling price and identify the cap rate at which that property had been sold to this for several properties, and to begin to build a data set of what are essentially comparable sales can also transpose the formula to calculate the noi by taking the value or the selling price or perhaps the asking price, multiplying it by the prevailing cap rate for that location, that property type. And that would tell you what kind of noi you shouldn’t be expecting from this property if indeed the price makes sense. Now in our next session, we’re going to stick with this topic of income capitalization a little bit longer. And we’re going to go through some specific examples actually working through some of these calculations.

Jason Hartman 18:46
I hope you enjoyed that lesson on noi and cap rates. Remember, Frank is really about commercial real estate. His examples relate to commercial real estate, but the same kinds of things apply In the residential real estate world, residential income property world, I should say, as you know, when I’ve talked about many times over the last 15 years, I’m not a huge fan of cap rate as a metric, but it does have its application. And a lot of people use it as a metric. Remember, it doesn’t include leverage or appreciation. And I think it kind of leaves a lot to be desired in that respect, but it is a commonly used metric. So it’s good that you know more about it and have an understanding of it. In either case, let’s jump into the next segment and talk about property melt. It’s my pleasure to welcome Ray husband to the show. He is co founder and CEO of property meld. Ray, welcome. How you doing? Hey, Jason, I’m doing quite well. appreciate you having me on the show. Well, it’s good to have you. So we want to kind of talk about two things. In part we want to talk about some data on renter experience and you know how to reduce turnover and Such, then talk about the software solution that you have for that

Ray Hespen 20:05
if you’d like. I mean, I can kind of give you the genesis of kind of the reason we we looked into solving the maintenance problem and that might be able to give some of your viewers some insight into a lot of times what happens in the renters mindset? Yeah,

Jason Hartman 20:17
sounds good. Let’s do

Ray Hespen 20:18
it. It actually started I traveled all around through the US. I’m actually an engineer by trade and, and moved around a lot in the United States. I lived in all four time zones and about six years. And so I ran it a lot, for obvious reasons. And basically what happened is my co founder, CTO, had called me one day and asked, Is it always painful to be a renter and have maintenance done on a repair? And, you know, it really wasn’t a pleasant experience, you know, every time I you know, I tried to reach out I would phone tag or or get phone treat, or I get calls from odd numbers I didn’t know and ended up being a very non transparent process. So that was kind of what first got Listen to this whole maintenance game to start is realizing that the resident experience Isn’t that incredible? in a lot of instances, so we talked to quite a few firms and spoke about all the things that had to happen to kind of understand why the process itself can be a little daunting for most people and how to make a really good powerful experience for the renter. What do you do to make that less painful for the tenant? Certainly responding quickly is important, right? But are there any other things that can be done? You know, one of the biggest things that we’ve realized Jason is speed of repair is paramount. Transparency is right behind that and you think about what’s happening in other industries that the consumers used to right we see what’s happening Uber lift. Now we see what’s happening with about every pizza ordering service you can get, you see about when they’re making it when it’s through the oven when it’s on the way to your house. So we’re constantly being inundated with updates of what’s happening and so on. One of the things that I think that’s happening is as the renter is becoming more and more used to this level of service, it’s creating a further gap from what may have been the old way of doing things, and what needs to happen moving forward. Maybe it would help if I kind of go into, you know, the renter and how it’s becoming more and more important to them, sir. Yeah, you know, the renter of the past, really was somebody you couldn’t afford a home or he didn’t want to buy a home or whatever. And now we’re seeing this massive shift, right, in the last, you know, five, seven, you can go back to Oh, wait, oh, nine what happened after that? You have a lot of people saying families lose their homes and, and they don’t want to take on the burden. And so running is becoming a choice for a consumer. Yeah. As opposed to an absolute so you’re increasing the pool, but you’re also increasing kind of the demands that says, hey, I’m renting because I don’t want to have to deal with homeowners stuff. conjunction That. So it’s very interesting. You know, we’re seeing it with friends as they go. But non renewals are a pretty big deal for investors because you have a resident non renew their lease. And what does that mean you got to do is make rent. It’s expensive and lost revenue. And there’s now data that says that nearly a third of non renewals are driven by poor maintenance experience, which is big money. And that’s a controllable process, right. And the amount of renewals that do site maintenance, as being a primary driver is nearly half. It’s pretty significant in terms of impacting the bottom line. And I mean, again, if you kind of just look at it from the sake of who your renter is today versus who they were 10 years ago, you start having an understanding as to why

Jason Hartman 23:50
Okay, so talk about who that renter is a little bit. A lot of our investors

Ray Hespen 23:54
are,

Jason Hartman 23:55
you know, they’re aware that the renter profile has changed significantly. A lot of people doing it by choice. It’s not surprising that millennials are renting because they have a mortgage. They just didn’t get a house included. They got it’s called a student loan. And that was a pretty raw deal. I think they’ve they’ve wised up to that one, but it’ll be with them for 1020 years, sadly. And then you’ve got empty nester baby boomers that oddly are, you know, selling their homes and becoming renters? Which is a

Ray Hespen 24:24
kind of a new thing. Yeah. And I don’t think you can have any conversation about renters anymore without using the M word, right? The millennials. It’s funny, I am one. It’s this group of people that everybody sits there and goes, Oh, they love avocado toast. They, you know, they’re they’re in all that but hey, I’m

Jason Hartman 24:40
just ahead of you. I’m a Gen Xer and your generation is catered to generation in history.

Ray Hespen 24:49
It’s really funny because now I’m realizing I’m starting to say these Jen’s ears, man. I’m like, What is wrong with but it’s not only that, uh, you nailed a massive one. I think the student loan debt and the impact and what the borrowing capability is of somebody that’s got, you know, 50 to $100,000 of no collateral liability is a big one. The other thing is, I mean, you have a little bit more of a transient population. But millennials by and large are driving this market. I think I’ve seen somewhere I think Zillow releases their you know, report annually and this last one to 18 to 34 segment or somewhere around there. homeownership percentage for them is dropped like a rock whereas normally as you get to be, you know it closer to that 34 Mark, these renters start to start to transition into houses and it’s not happening. It’s really good for investors, but it’s showing you why it’s such a growing market. But you know, the transit thing is a big thing to a lot of people move jobs and they transfer more than they have historically as opposed to staying in their hometown any

Jason Hartman 25:53
any additional thoughts, you know, any kind of like new thoughts on on why the population is more trans now than it ever has been, you know, one of the things I’ve been saying for several years is that geography is less meaningful than it’s ever been in human history. It’s still meaningful, of course, but it’s less meaningful than ever in history. Think about the significance of that. And it’s going to get even less meaningful again, when we really see autonomous vehicles,

Ray Hespen 26:26
that’s going to be a game changer. First of all, I can’t wait for autonomous vehicles. I’ll live an hour outside of town where nobody can find me and just work on my driving But well, you know, your avocado toast is here as a Carson. So I would say I’m a pretty good anecdotal example of it. A lot of the driver for me was vertical mobility, right when it becomes less concerning to stay home and stay around your hometown. I grew up in a small town in Wyoming called Gillette wasn’t a ton of opportunity there and where I went to school, saying thing. And so that’s why I lived in four time zone. I lived in Tulsa, Oklahoma, I was in California, Chicago, Baltimore, Denver. And I moved in a pretty short period of time. And I don’t think, you know, I’m alone in that thinking it’s almost like this itch that people need to scratch anymore. That, like you said, it’s not if you’re no longer in a landlocked environment, you know, it’s becoming very, very common you’ve got and you know, I would even say to the the ability to search for jobs online, seems like not that big a deal. But now it’s the norm. Right? So where I can sit there and say, I do want to go live in this area, and it

Jason Hartman 27:38
summarizes it gives you a lot more options.

Ray Hespen 27:41
No more searching through the classifieds.

Jason Hartman 27:43
Exactly. Yeah. I mean, you know, I remember years ago, when we started investing nationwide, we would subscribe to newspapers in other cities. You know what I mean? It’s not like, it’s not like we didn’t have the internet then we did. But you know it just every day. becomes more and more impactful, of course, right?

Ray Hespen 28:01
Exactly.

Jason Hartman 28:04
Okay, so society is more transy and more portable than ever geographies, less meaningful than ever. The best thing you can have on a resume is mobility, being able to move to where the jobs are, you know, you can keep in touch with your friends all around the world quite easily nowadays. So that’s all changed and made the population more transit, which means more renters. Any other factors you want to share?

Ray Hespen 28:28
Well, I think you nailed it on the head with a lot of that. I mean, I think that’s the big driver. And, and, you know, especially if you know, you don’t have anything holding you home, it makes it really easy to move. So yeah, yeah. Okay, good.

Jason Hartman 28:41
Okay. So tenant turnover and not keeping your renters not having longevity with your tenants. You say that one of the biggest drivers of that is, is maintenance headaches for them, right when, you know, they complain that the landlord doesn’t maintain the property well, and doesn’t respond fast enough, right?

Ray Hespen 28:58
Correct. Correct. It Be Is it I mean, so I’ll tell you, we analyze I mean hundreds of thousands of service issues. I’ll tell you on our platform, we I think last time we checked, we get about a 36% feedback on service issues. So I mean, 36% of service issues completed, we get somebody to give us a rating, or give the the property management firm or rating on how the service was. And over hundreds of thousands, we realized that the thing that’s got the strongest correlation of anything, you take region category, everything out of it is speed of repair, like not closing out an issue in your accounting system, but literally the time they make the call or submit online to it being done and their issue being rectified. It’s the strongest correlation you can get. I can tell you even more specifically, most people, after you pass about three and a half days on the service issue, it gets pretty detrimental to your satisfaction surveys. Much so that unlike HVC report If it’s after three and a half days, you have a very, very small sliver of a chance of even getting a positive experience. Plumbing issue, you have around four and a half days electrical, you have five, but there’s a certain point where it doesn’t matter. Okay? You’re basically your clients are typically, occupants. Well, I mean, they’re their managers and owners of multi unit apartment complexes. So so these are apartment occupants that are being surveyed right? By and large,

Jason Hartman 30:31
right, and you have single family homes to in your system, but tell us how your system works. How does it fix this problem?

Ray Hespen 30:38
So one of the things when we evaluated the process, we realized that the person managing the portfolio or you know, whether it be the building is playing quarterback a lot of the times. So when we looked at the problem, we said, Hey, like we need to get this person out of it. We need to connect the renter with the service provider, and just keep the middle person up to speed. And that was one of the big components and shifts. So, you know, when somebody submits a service issue through a property meld, not only are we you know, engaging them and text message from there, but we’re, they’re allowed to submit, communicate, schedule their own time, be reminded when it’s happening notified when it’s done all automatically, without the person managing the unit having to get involved. And it works with I mean, it’s obviously an intelligent system, it works with the service provider, finding out when they can get out to the unit works with the resident to do it all without a phone call. The top three ways that anybody residents want to get the gun hold off was text message, email, and a very distant third phone. So we worked really hard to eliminate that communication path. Not only is it not effective, but it’s time consuming. Yeah, very interesting. Okay.

Jason Hartman 31:47
Anything else that it does? One of the things I think you should tell people is that it’s not a network of contractors and repair, maintenance people, right. Everybody just brings their own To the platform in gets them on the platform gets the tenants on the platform, or does it integrate with the other property management software systems and those portals? Or tell us more about that?

Ray Hespen 32:12
Yeah. So we do have integrations with multiple property management systems that are out in the marketplace. And more popping up every day, which is great. The environment continues to open, which is good. But yeah, it’s all entirely web based. So you don’t you’re not relying on somebody downloading an app, which is really, really important this day and age, the moment somebody sits there and goes, Hey, can you download this they’re calling, right? So it allows all the communication and facilitation within the app itself, heavily based in text messaging, email, and now our goal really is to eliminate the phone call, but we do not provide vendors. We work with your own internal technicians and your own vendor service providers that you currently have relationships with. Okay, good. Anything else you want people to know? So if you ever want to check out property mounts, you can definitely check www dot property mail. com. One of the things that we really bolster we take pride in is we reduce the maintenance coordination hours by about 60%. So that means we’re doubling and tripling capacity maintenance coordinators or it’s a time thing, right, dropping that down in our standard platform average, because resident experience is so important. It’s a 4.3 out of five, across the system,

Jason Hartman 33:22
is there any accountability for the maintenance people in terms of there are some apps that we’ve talked about on the show that geotagged photos of you know repair items, that clock the time they spent on the item, you know, for if you’re paying them hourly, etc? And sort of keeps those contractors honesty, right, you know, trust but verify rankings.

Ray Hespen 33:46
So famously, you know, would any aspects of that or other aspects of the technology you want us to know about right, one of the biggest KPIs that we tell our clients and we tell the industry to focus on is resident satisfaction for the bottom line impacts. I I mentioned earlier. So one of the really cool things is we will actually show you how those vendors and how those technicians are providing service to your firm. All those ratings that you’re going to get feedback as somebody who manages properties is going to show you who’s giving you the high marks and who’s given you the low marks, not only sitting there telling you what the residents think, but it’ll actually track and trend and show you how long it’s taking them to do jobs. So we believe that the person doing the actual work has more impact than about anything else in the system. So we do track and make sure that that’s available. We got a whole bunch of other features, clocking in clocking out tracking expenditures, submitting invoices, all those sort of things, but the big one is the accountability is what the residents experience was because if they do in poor experience for the residents, not much else matters because you’re going to lose them anyways. Right, right.

Jason Hartman 34:52
We had a little talk off air before we started today about how you know what your sort of current ideal client is, and what your plans are for the future. You know, right now, most of your clients are larger landlords with like 100 doors. But the technology is so beautifully scalable, that you can you know, once you you work through that, and really get, you know, even more and more data and experience and data points and so forth. Take it down market to the smaller investor,

Ray Hespen 35:26
right? Yeah, the reason we the hundred doors has become a big deal is because as I mentioned is you’ve got a system that manages a lot of throughput, and you have to treat it in a way that such whereas you get smaller the throughput decreases the amount of granularity setup, the headache becomes more mature, right, as we get better at what we do. We can make our clients that managers less units and less units more effective. And that is a goal of ours. We want this to be a really powerful tool to help people you know, even less than 100 doors.

Jason Hartman 35:54
Yeah, right. Right. That’s what’s great about a lot of these technologies that were you know, former only available to large enterprises. You know, you wait a couple of years and it just goes right down to the flat, flattened world, right. You know where, where everybody can take advantage of it. So good stuff. The website is property. mail.com Thank you for joining us, right.

Ray Hespen 36:16
Hey, thank you so much, Jason. Appreciate it.

Jason Hartman 36:20
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